Exploring Social Innovation Bonds in Pennsylvania

There’s more than one way to skin a cat and there’s more than one way to fund social innovation.  As Rick Cohen of Nonprofit Quarterly details in his piece, Social Impact Bonds: Phantom of the Nonprofit Sector, bipartisan support of Social Innovation Bonds has been seen in the Senate and the enthusiasm in the U.S. has spread from political offices and think tanks in DC to several cities and states.  This is despite some reservations about the unproven benefits of implementing SIBs.

SIBs are noted for financing solutions to scale without putting public budgets at risk.  However, as noted in a brief write-up by McKinsey, the overall structure of a SIB involves multiple actors that each come with a cost, so despite shifting the risk the overall cost becomes more expensive.  In September 2010, an organization called Social Finance UK launched the first SIB.  Since then, there has been much discussion about the possibility of launching in the US.

This made me curious about the SIB conversation in Pittsburgh.  There is evidence online of SIBs being brought up in several public conversations.  At the Pittsburgh Nonprofit Summit in 2011, representatives of the McCune Foundation facilitated a presentation on SIBs with speakers from the Growth Philanthropy Network and the Nonprofit Finance Fund.  The Powerpoint from that presentation included information about SIB structures and feasibility issues and can be accessed in full here.

A Subcommittee Report from Mayor Peduto’s transition period into office also summarizes a recommendation titled “Applying Social Impact Bond to Early Education Initiatives”.  This may have been reflective of interest from other areas of the state as this CNBC article illustrates.  The CNBC piece discusses Pennsylvania Governor Tom Wolf’s handling of state proposals for the implementation of SIBs with involvement from Goldman Sachs.  

With visible support for new financing solutions to social issues in Pennsylvania, I’m curious to follow the continued discussion of SIB implementation.